Current natural gas market conditions could signal trouble for consumers this winter and lingering problems for years to come, according to energy economists polled by FOX Business.
Experts said the energy crisis in Europe, partly caused by Russia’s invasion of Ukraine, will continue to hurt American consumers through the winter as global supplies of natural gas and oil are tense. They also noted that the green energy push announced by the Biden administration and several state governments will further lead to dwindling and unreliable energy supplies, pushing future prices higher.
“The biggest problem is that the shortage in Europe is driving up prices, and prices are set globally,” said Diana Furchtgott-Roth, director of the Center for Energy, Climate and Environment at the Heritage Foundation, to FOX Business in an interview. “Because natural gas prices are higher globally, we’re exporting more, and that’s pushing prices up here.”
“At the same time, we put forward a number of policies that discourage our companies from producing,” she continued. “Reasonable people might think that if there was a shortage of natural gas in Europe, the United States would do everything it could to increase production here.”
EXPERTS BLAM GREEN ENERGY POLICIES FOR EUROPE’S LARGE-SCALE ENERGY CRISIS: ‘A WARNING TO THE US’
The National Energy Assistance Directors Association (NEADA) predicted last week that the average cost of home heating for all fuels, including gas, oil and propane, would increase 17.2% this winter compared to last week. last year. The group further predicted that home heating costs would be more than 35% higher than they were two years ago.
NEADA executive director Mark Wolfe said rising prices would force millions of low-income families to choose between paying for food, medicine and rent.
EU GREEN ENERGY POLICIES HAVE STRENGTHENED PUTIN, SAYS MICHAEL SHELLENBERGER
Mainly due to the increase in natural gas prices, electricity prices are also expected to increase compared to last year. Overall, consumers are expected to spend nearly 8% more on electricity year-over-year in 2022, according to the Energy Information Administration (EIA).
“Prices are going to be higher, especially for natural gas, in part because of increased demand for liquefied natural gas from Europe and Asia depending on the weather this winter,” said Benjamin Zycher, economist and senior fellow at the American Institute of Business.
In the aftermath of the Russian invasion of Ukraine, the European Union (EU) tried to cut itself off from natural gas imports from Russia. Russian energy producers were by far the largest suppliers of natural gas to Europe in 2021.
GREEN GROUPS SLAM DEMS SECONDARY NATURAL GAS AGREEMENT AS ‘TREASON’
To help fill the void, the EU struck a deal with the Biden administration in March to send an additional 530 billion cubic feet of liquefied natural gas (LNG) to the EU by the end of the year. The United States exported 300 million cubic feet of natural gas in June, the latest month with EIA data, up more than 10% year-over-year.
“It’s a real challenge for Europe this winter,” said Jim Hamilton, an economics professor at the University of California, San Diego, who specializes in energy markets. “It’s potentially a big problem for them to try to do without gas from Russia. Liquefied natural gas is a potential [answer] to that – you can ship that across the ocean. “
“But it’s something I think we really want to try to accelerate here given the real potential risk of a crisis that Europe faces,” Hamilton said.
However, increased gas exports leaving the United States for European buyers have put increased pressure on domestic supplies.
On Tuesday, natural gas was trading at $7.71 per million British thermal units (MMBtu) while futures prices for January 2023 hit $8.04 per MMBtu, according to market data. By comparison, the average natural gas price was $3.26 per MMBtu between 2010 and 2021, according to Federal Reserve data.
Natural gas inventories have been depleted in recent months, down 7.4% year-over-year and 11.3% from their 2017-21 average, according to the EIA.
BIDEN ADMIN SETTLE UP WITH ECO GROUPS TO BLOCK MASSIVE OIL DRILLING LEASES
“You will get price increases,” David Kreutzer, senior economist at the Institute for Energy Research, told FOX Business. “Natural gas in the world is very limited because of the problem in Russia and the fact that Europe has decided not to develop its own gas resources. So they will turn to us.”
Both Kreutzer and Zycher echoed Furchtgott-Roth, saying the United States also faces significant power and energy grid issues in the coming winters due to the increased push for energy. green.
They noted Biden administration policies such as Interior Department rental restrictions, a proposed Securities and Exchange Commission climate disclosure rule, and a Federal Energy Regulatory Commission proposal making it more difficult to approval of fossil fuel infrastructure projects.
“There is this massive political favoritism towards wind and solar energy which, despite subsidies, are extremely expensive, unreliable – thus, electricity prices are rising sharply in some states due to substitution of electricity not conventional and non-competitive in place of competitive traditional conventional electricity,” Zycher said.
CALIFORNIA GRID LIES HEAVILY ON NATURAL GAS TO SURVIVE ENERGY CRISIS, DESPITE GREEN PUSH
“The political attack – political, regulatory, ideological – on fossil fuels has had the effect, not surprisingly, of reducing investment and, therefore, expected future production and driving up expected future prices,” he said. he continued. “And, therefore, the current prices as well.”
GET FOX BUSINESS ON THE ROAD BY CLICKING HERE
He specifically pointed to California where the state’s energy grid operator recently warned of large-scale blackouts due to increased demand. California and several other states have attempted in recent years to replace existing fossil fuel generation capacity with renewables like solar and wind.
“The problem…is there are places like California where they’ve built renewables and their reliance on them and Texas where if you have a period with really cold temperatures and it’s not there’s not a lot of wind, you’re going to have brownouts or blackouts, which are much worse than price increases,” Kreutzer said.
#Underlying #energy #market #conditions #signal #challenges #consumers #winter